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Problem - Roseville, Inc. produces two types of gaming systems: Starter and Advanced. The gaming products are produced in separate departments and sent to the quality testing department before being packaged and shipped. A labor-hour bottleneck has been identified in the quality testing department due to the high skill requirements of the job. Roseville, Inc. has compiled the following data in order to optimize its use of labor hours for producing the most profitable product.
Quality Testing Labor-hours
Contribution Margin
Starter
0.80
$200
Advanced
0.50
150
Required - What is the contribution margin per quality testing labor-hour for the Starter product?
a. $160
b. $40
c. $269
d. $250
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